Talking Points
- The EUR/USD fails to breakout on better than expected news
- Daily EUR/USD price action consolidates with an inside bar
- Breakouts may be confirmed or rejected by tracking momentum with the Grid Sight Index
The EUR/USD is trading flat this morning despite a series of news events beating expectations. First EUR German Industrial Production numbers printed better than expected at .8% (MoM) (APR). This was then followed by EUR Euro-Zone Household Consumption printing higher at .6%. However, despite these numbers, the EUR/USD is poised to close the day inside of yesterday’s high and low, with the formation of an inside bar.
Looking for additional trade ideas for the EUR/USD? Check out our Trading Guide
EUR/USD 1Daily Inside Bar
(Created using Grid Sight Index)
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As prices consolidate, EUR/USD traders should keep their eyes open for a breakout to determine the markets chosen direction. Bullish breakouts may begin at yesterday’s high at 1.13927 as a point of resistance. Alternatively, yesterday’s low at 1.13253 may be seen as a value of support. A breakout below this value may suggest further declines of fresh downward momentum.
Traders looking for breakout confirmation may track momentum using the Grid Sight Index (GSI). Once price has moved through either of the technical values mentioned above, traders may use Grid Sight to track historical distributions of price. After a bullish breakout of resistance, we should be seeing an increase in the percentages of historical bullish distributions. Alternatively, if a bearish breakout occurs, there should be an increased bias for historical downward distributions.
False Breakouts
The Grid Sight Index can also be used to help pinpoint if a market breakout has been invalidated. In the instance that prices breakout higher, traders should be warry of the EUR/USD declining back through previous resistance (now support). In this scenario, we should again to begin seeing an increase in bearish historical distributions. Alternatively if prices breakout lower, a heavy weight of bullish distributions may suggest a turn in price back inside of today’s trading range.
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Looking for additional trade ideas for US Dollar Pairs? Check out our Trading Guide
